It was a shortened week for the U.S. markets, with exchanges closed on Thursday for Thanksgiving, and an early market close on Friday. After a mixed week, the S&P 500 finished higher on Wednesday, and was climbing even higher on Friday morning. Black Friday reports from Wal-Mart and Target suggested that sales would be better than last year, and both companies reported that certain sales records had already been broken before Black Friday was over. For economic reports this week, Initial Jobless Claims came in below the 330,000 expectation at 316,000; Consumer Confidence came in at 70.4, below the estimate of 72.6; and October Building Permits came in well above the expected 930,000 at 1,034,000. Treasury yields were fairly steady throughout the week. Below, we look at Moody's municipal bond upgrades and downgrades from the past week.

Upgrades

• Dallas Independent School District, TX: Moody's upgraded this school district to Aa1 from Aa2. The upgrade to Aa1 reflects the district's significantly improved financial operations resulting from conservative budgeting and tightened expenditure controls supporting healthy reserve levels more consistent with the Aa1 rating. Additionally, the Aa1 rating takes into consideration the district's large, diverse, and expanding tax base as well as growing enrollment that are mitigating factors to the low socioeconomic profile that is typical for a large, urban school district.
• Cocoa, FL: Moody's upgraded this city's Water and Sewer Enterprise's outstanding revenue bonds to Aa2 from Aa3. The upgrade to Aa2 reflects the system's improving financial ratios, including debt service coverage and liquidity, the recent adoption of 5% annual rate increases, and well developed financial and capital plans. The rating also incorporates institutional presence that provides stability for the system's sizable customer base, legal provisions that provide adequate bondholder protection, and above average debt ratio.
• Bay County, FL: Moody's upgraded this county to Aa3 from A1. The upgrade to Aa3 is based on the utility's improved and favorable financial metrics, dominant service area position, healthy capacity and supply, and satisfactory legal provisions.
• Tennessee Energy Acquisition Corporation: Moody's upgraded this corporation to Baa1 from Baa3. The ratings of the Bonds took into account the credit quality of (i) Royal Bank of Scotland plc (A3) as a commodity swap provider; (ii) Royal Bank of Canada (Aa3) as a commodity swap provider; and (iii) Depfa Bank plc (Baa3) as investment agreement provider.

Downgrades

• Franklin County, OH: Moody's downgraded this county to B1. The bonds are being downgraded following cash flow analysis projecting revenue insufficiencies beginning in approximately two years.
• Granville Exempted Village School District, OH: Moody's downgraded this school district to Aa2 from Aa1. The downgrade to Aa2 reflects the district's diminished financial position after seven consecutive years of operating deficits.
• Azusa, CA: Moody's downgraded this city's Public Financing Authority's Parity Revenue Bonds (Water System Capital Improvements Program), Series 2006 to A2 from Aa3. The downgrade of the Parity Revenue Bonds, Series 2006 to A2 reflects the risks to the water system's credit profile due to the weak financial position of the city. The city continues to have very weak general fund liquidity and will likely continue to have budgetary pressures and continued budgetary imbalance. Citywide financial operations remained imbalanced by year-end fiscal 2012 and show limited evidence of future structural balance.
• Effingham County Industrial Development Authority, GA: Moody's downgraded this county to Aa3 from Aa2. The downgrade to Aa3 reflects narrow debt service coverage provided by the limited tax pledge with no ability to override the mill rate. The rating also incorporates adequate legal provisions including a liquidity requirement and the expectation of no additional parity bonds.
• Ashland University, OH: Moody's downgraded this university to Caa2 from B3. The Caa2 rating and negative outlook reflect Ashland University's very weak liquidity, high leverage, insufficient cash flow to support debt service and challenging student market. These challenges are exacerbated by three-years of enrollment declines and heavy dependence on tuition revenues. The university has a complex debt structure including variable rate debt, financial covenants, cross-default provisions, short maturities with bullet payments and interest rate derivatives, which pose refinancing and acceleration risks.